The tax reform bill being worked on by Congress is close to stalling "as opposition in the House pushes the timetable for passage well into summer," according to Greg Valliere, chief U.S. policy strategist for AGF Investments.
House Speaker Mike Johnson conceded Monday that a tax reform package "probably won’t pass by Memorial Day, his original goal," Valliere wrote in his Tuesday morning newsletter.
The new target: to finish by the July 4 break, "but even that will be an uphill fight," Valliere said.
In late April, Treasury Secretary Scott Bessent set a July 4 goal to pass President Donald Trump’s multitrillion-dollar tax cut package as polling showed that voters largely disapproved of the White House’s handling of the economy, Bloomberg reported.
While dozens of the bill's provisions "have encountered opposition," Valliere stated, "two stand out — how to pay for the bill, and how much to cut Medicaid spending (or, to be accurate, how much to slow the growth of Medicaid)."
All eyes are on the House, according to Raymond James analysts, as "the most important details of the tax cut debate" will be released next week when the House Ways and Means and House Energy and Commerce committees release the text of the upcoming reconciliation bill.
"The decisions made in the House over the next week will form the foundation of the most expensive bill in U.S. history," the Raymond James analysts said.
Tax bill supporters, Valliere continued, say that "'waste, fraud and abuse' will be targeted, with no benefit cuts, along with new spending for state and local real estate tax breaks, agricultural outlays and prescription drug price relief — just a few of the issues that both houses will have to resolve."
Johnson "is a clever and aggressive negotiator, so he probably will steamroll a bill through the House just before the summer recess, which will last for all of August," Valliere wrote. "That would infuriate Trump, who wants a bill — and some fiscal stimulus — by the end of this month. The deficit is not a top priority for Trump."
The final bill, however, "will have less in Medicaid savings than Johnson wants, so there’s a growing likelihood that accounting gimmicks — including assumptions of strong economic growth and a big contribution from the states — will play a role," Valliere said.
"The stimulative impact on the economy will come in 2026, which Trump and the Republicans could live with, ahead of an election," Valliere concluded. "All of the House and a third of the Senate are up for re-election next year, when the stakes will be much higher than passing a bill this summer."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.